Rule Change: Completed

Overview

On 31 July 2014 the AEMC (Commission) made a final determination in relation to the Governance of retail market procedures rule change request. It determined not to make a rule.

The Commission has not been satisfied that a case has been made to change the current governance arrangements for electricity retail market procedures. In particular, it considers that the existing industry-led approach to developing business-to-business (B2B) procedures remains appropriate under current conditions.

This decision does not preclude changes to the B2B arrangements being made in the future. The Commission considers that it would, however, be premature to amend the rules in anticipation of changes when neither the nature, nor extent, of those changes has been explicitly explored or identified.

The development and progression of more specific rule changes and reviews, such as those derived from the Power of Choice review, would provide a more appropriate opportunity to consider and implement any consequential changes to the arrangements for retail market procedures. This is due to the potential of these projects to directly impact on the structure and functions of the IEC. There is, therefore, efficacy in aligning the timing and consideration of more substantial proposals in relation to the B2B arrangements within these more detailed frameworks for change. Modifications to the existing arrangements, for example to membership of the Information Exchange Committee as it is currently constituted, can also be progressed through the rule change process.

Background

On 20 June 2013 the Commission received a rule change request from AEMO seeking to amend the governance arrangements for the development of electricity retail market procedures. The proposal would lead to changes in the development process and management of these procedures, in particular the B2B procedures.

Presently, the governance framework for the development of Chapter 7 procedures depends on whether the procedure is classified as being either B2B or non-B2B. B2B procedures encompass the operational communications between retailers and distribution businesses. These cover the routine exchange of large volumes of information that underpin retail activities. This includes instructing connections, disconnections and special meter reads, as well as customer and site details, and network billing.

The development of procedures for B2B communications is managed by the Information Exchange Committee (IEC), an industry group representative of retailers and distribution network service providers (DNSPs), together with two independent members. Conversely, the development of all other chapter 7 procedures is managed by AEMO under a separate process.

AEMO has identified the following key issues with the current arrangements for the development of these procedures:

they are inflexible, due to over-prescription in the rules. This could inhibit the market from being able to respond in a timely fashion to technological and market developments in the future;

they are inefficient due to the existence of multiple procedure making processes required by the rules;

they give rise to a lack of clarity in accountability for B2B procedures and the risk of inconsistencies between B2B and other, overlapping procedural areas occurring. This is because of the presence of two independent procedure making bodies required under the NER.

To address these perceived deficiencies, AEMO has proposed a new approach to the making of the above procedures, including the integration of the different arrangements under single framework to be managed by AEMO.

On 24 October 2013, the AEMC formally commenced this rule change process and published a consultation paper. 11 submissions were received. On 30 January 2014 the Commission extended the period of time, under s. 107 of the National Electricity Law, to make the draft rule determination. The draft determination was published on 8 May 2014. Four submissions were received.